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DLG
Commercial
Real Estate
Commercial Real Estate
Terms
A - E l
F - J l K - P
l Q - U l
V - Z
Availability
Rate:
The ratio of available space to total rentable space,
calculated by dividing the total available square feet
by the total rentable square feet.
Available
Space:
The total amount of space that is currently being
marketed as available for lease in a given time period.
It includes any space that is available, regardless of
whether the space is vacant, occupied, available for
sublease, or available at a future date.
Build-to-Suit:
A term describing a particular property, developed
specifically for a certain tenant to occupy, with
structural features, systems, or improvement work
designed specifically for the needs of that tenant. A
build-to-suit can be leased or owned by the tenant. In
a leased build-to-suit, a tenant will usually have a
long term lease on the space.
Buyer:
The individual, group, company, or entity that has
purchased a commercial real estate asset.
Cap Rate:
Short for capitalization rate. The Cap Rate is a
calculation that reflects the relationship between one
year’s net operating income and the current market
value of a particular property. The Cap Rate is
calculated by dividing the annual net operating income
by the sales price (or asking sales price).
CBD:
Abbreviation for Central Business District. (See also:
Central Business District)
Central
Business District:
The designations of Central Business District (CBD) and
Suburban refer to a particular geographic area within a
metropolitan statistical area (MSA) describing the
level of real estate development found there. The CBD
is characterized by a high density, well organized core
within the largest city of a given MSA.
Class A:
A classification used to describe buildings that
generally qualify as extremely desirable
investment-grade properties and command the highest
rents or sale prices compared to other buildings in the
same market. Such buildings are well located and
provide efficient tenant layouts as well as high
quality, and in some buildings, one-of-a-kind floor
plans. They can be an architectural or historical
landmark designed by prominent architects. These
buildings contain a modern mechanical system, and have
above-average maintenance and management as well as the
best quality materials and workmanship in their trim
and interior fittings. They are generally the most
attractive and eagerly sought by investors willing to
pay a premium for quality.
Class B:
A classification used to describe buildings that
generally qualify as a more speculative investment, and
as such, command lower rents or sale prices compared to
Class A properties. Such buildings offer utilitarian
space without special attractions, and have ordinary
design, if new or fairly new; good to excellent design
if an older non-landmark building. These buildings
typically have average to good maintenance, management
and tenants. They are less appealing to tenants than
Class A properties, and may be deficient in a number of
respects including floor plans, condition and
facilities. They lack prestige and must depend chiefly
on a lower price to attract tenants and investors.
Class C:
A classification used to describe buildings that
generally qualify as no-frills, older buildings that
offer basic space and command lower rents or sale
prices compared to other buildings in the same market.
Such buildings typically have below-average maintenance
and management, and could have mixed or low tenant
prestige, inferior elevators, and/or
mechanical/electrical systems. These buildings lack
prestige and must depend chiefly on a lower price to
attract tenants and investors.
Construction
Starts:
Buildings that began construction during a specific
period of time. (See also: Deliveries)
Contiguous
Blocks of Space:
Space within a building that is, or is able to be
joined together into a single contiguous space.
Deliveries:
Buildings that complete construction during a specified
period of time. In order for space to be considered
delivered, a certificate of occupancy must have been
issued for the property.
Delivery
Date:
The date a building completes construction and receives
a certificate of occupancy.
Developer:
The company, entity or individual that transforms raw
land to improved property by use of labor, capital and
entrepreneurial efforts.
Direct
Space:
Space that is being offered for lease directly from the
landlord or owner of a building, as opposed to space
being offered in a building by another tenant (or
broker of a tenant) trying to sublet a space that has
already been leased.
Existing
Inventory:
The square footage of buildings that have received a
certificate of occupancy and are able to be occupied by
tenants. It does not include space in buildings that
are either planned, under construction or under
renovation.
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Flex
Building:
A type of building designed to be versatile, which may
be used in combination with office (corporate
headquarters), research and development, quasi-retail
sales, and including but not limited to industrial,
warehouse, and distribution uses. A typical flex
building will be one or two stories with at least half
of the rentable area being used as office space, have
ceiling heights of 16 feet or less, and have some type
of drive-in door, even though the door may be glassed
in or sealed off.
Full Service
Rental Rate:
Rental rates that include all operating expenses such
as utilities, electricity, janitorial services, taxes
and insurance.
Gross Absorption:
The total change in
occupied space over a given period of time, counting
space that is occupied but not space that is vacated by
tenants. Gross absorption differs from leasing
Activity, which is the sum of all space leased over a
certain period of time. Unless otherwise noted Gross
Absorption includes direct and sublease space.
Growth in
Inventory:
The change in size of the existing square footage in a
given area over a given period of time, generally due
to the construction of new buildings.
Industrial
Building:
A type of building adapted for such uses as the
assemblage, processing, and/or manufacturing of
products from raw materials or fabricated parts.
Additional uses include warehousing, distribution, and
maintenance facilities. The primary purpose of the
space is for storing, producing, assembling, or
distributing product.
Landlord
Rep:
(Landlord Representative) In a typical lease
transaction between an owner/landlord and tenant, the
broker that represents the interests of the
owner/landlord is referred to as the Landlord Rep.
Leased
Space:
All the space that has a financial lease obligation. It
includes all leased space, regardless of whether the
space is currently occupied by a tenant. Leased space
also includes space being offered for sublease.
Leasing
Activity:
The volume of square footage that is committed to and
signed under a lease obligation for a specific building
or market in a given period of time. It includes direct
leases, subleases and renewals of existing leases. It
also includes any pre-leasing activity in planned,
under construction, or under renovation buildings.
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Market:
Geographic boundaries that serve to delineate core
areas that are competitive with each other and
constitute a generally accepted primary competitive set
of areas. Markets are building-type specific, and are
non-overlapping contiguous geographic designations
having a cumulative sum that matches the boundaries of
the entire Region (See also: Region). Markets can be
further subdivided into Submarkets. (See also:
Submarkets)
Multi-Tenant:
Buildings that house more
than one tenant at a given time. Usually, multi-tenant
buildings were designed and built to accommodate many different floor plans
and designs for different tenant needs. (See also:
Tenancy).
Net
Absorption:
The net change in occupied space over a given period of
time. Unless otherwise noted Net Absorption includes
direct and sublease space.
Net Rental
Rate:
A rental rate that excludes certain expenses that a
tenant could incur in occupying office space. Such
expenses are expected to be paid directly by the tenant
and may include janitorial costs, electricity,
utilities, taxes, insurance and other related costs.
New Space:
Sometimes called first generation space, refers to
space that has never been occupied and/or leased by a
tenant.
Occupied
Space:
Space that is physically occupied by a tenant. It does
not include leased space that is not currently occupied
by a tenant.
Office
Building:
A type of commercial building used exclusively or
primarily for office use (business), as opposed to
manufacturing, warehousing, or other uses. Office
buildings may sometimes have other associated uses
within part of the building, i.e., retail sales,
financial, or restaurant, usually on the ground floor.
Owner:
The company, entity, or individual that holds title on
a given building or property.
Planned/Proposed:
The status of a building that has been announced for
future development but not yet started construction.
Preleased
Space:
The amount of space in a building that has been leased
prior to its construction completion date, or
certificate of occupancy date.
Price/SF:
Calculated by dividing the price of a building (either
sales price or asking sales price) by the Rentable
Building Area (RBA).
Property Manager:
The company and/or person
responsible for the day-to-day operations of a
building, such as cleaning, trash removal, etc. The
property manager
also makes sure that the various systems within the
building, such as the elevators, HVAC, and electrical
systems, are functioning properly.
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Quoted
Rental Rate:
The asking rate per square foot for a particular
building or unit of space by a broker or property
owner. Quoted rental rates may differ from the actual
rates paid by tenants following the negotiation of all
terms and conditions in a specific lease.
RBA:
Abbreviation for Rentable Building Area. (See also:
Rentable Building Area)
Region:
Core areas containing a large population nucleus, that
together with adjacent communities have a high degree
of economic and social integration. Regions are
further divided into market areas, called Markets. (See
also: Markets)
Relet Space:
Sometimes called second generation or direct space,
refers to existing space that has previously been
occupied by another tenant.
Rentable
Building Area:
(RBA) The total square footage of a building that can
be occupied by, or assigned to a tenant for the purpose
of determining a tenant’s rental obligation. Generally
RBA includes a percentage of common areas including all
hallways, main lobbies, bathrooms, and telephone
closets.
Rental
Rates:
The annual costs of occupancy for a particular space
quoted on a per square foot basis.
Sales Price:
The total dollar amount paid for a particular property
at a particular point in time.
Sales
Volume:
The sum of sales prices for a given group of buildings
in a given time period.
Seller:
The individual, group, company, or entity that sells a
particular commercial real estate asset.
SF:
Abbreviation for Square Feet.
Single-Tenant:
Buildings that are occupied, or intended to be occupied
by a single tenant. (See also: Build-to-suit and
Tenancy)
Sublease
Space:
Space that has been leased by a tenant and is being
offered for lease back to the market by the tenant with
the lease obligation. Sublease space is sometimes
referred to as sublet space.
Submarkets:
Specific geographic boundaries that serve to delineate
a core group of buildings that are competitive with
each other and constitute a generally accepted primary
competitive set, or peer group. Submarkets are building
type specific (office, industrial, retail, etc.), with
distinct boundaries dependent on different factors
relevant to each building type. Submarkets are
non-overlapping, contiguous geographic designations
having a cumulative sum that matches the boundaries of
the Market they are located within (See also: Market).
Suburban:
The Suburban and Central Business District (CBD)
designations refer to a particular geographic area
within a metropolitan statistical area (MSA). Suburban
is defined as including all office inventory not
located in the CBD. (See also: CBD)
Tenancy:
A term used to indicate whether or not a building is
occupied by multiple tenants (See also: Multi-tenant)
or a single tenant. (See also: Single-tenant)
Tenant Rep:
Tenant Rep stands for Tenant Representative. In a
typical lease transaction between an owner/landlord and
tenant, the broker that represents the interests of the
tenant is referred to as a Tenant Rep.
Time On
Market:
A measure of how long a currently available space has
been marketed for lease, regardless of whether it is
vacant or occupied.
Under
Construction:
The status of a building that is in the process of
being developed, assembled, built or constructed. A
building is considered to be under construction after
it has begun construction and until it receives a
certificate of occupancy.
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Vacancy
Rate:
A measurement expressed as a percentage of the total
amount of physically vacant space divided by the total
amount of existing inventory. Under construction space
generally is not included in vacancy calculations.
Vacant
Space:
Space that is not currently occupied by a tenant,
regardless of any lease obligation that may be on the
space. Vacant space could be space that is either
available or not available. For example, sublease
space that is currently being paid for by a tenant but
not occupied by that tenant, would be considered vacant
space. Likewise, space that has been leased but not yet
occupied because of finish work being done, would also
be considered vacant space.
Weighted
Average Rental Rate:
Rental rates that are calculated by factoring in, or
weighting, the square footage associated with each
particular rental rate. This has the effect of causing
rental rates on larger spaces to affect the average
more than that of smaller spaces. The weighted average
rental rate is calculated by taking the ratio of the
square footage associated with each rental rate to the
square footage associated with all rental rates,
multiplying the rental rate by that ratio, and then
adding together all the resulting numbers.
Year Built:
The year in which a building completed construction and
was issued a certificate of occupancy.
YTD:
Abbreviation for Year-to-Date. Describes statistics
that are cumulative from the beginning of a calendar
year through whatever time period is being studied.
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